Although they’ve been around for a couple of years, debt counsellors and debt counselling are still fairly new concepts.
Did you know that Debt counselling inquiries jumped by 30% last year? That means more and more people want to work with debt counsellors.
People in South Africa seem to be remarkably interested. So what are debt counsellors? What do they do? And can we trust them?
Let’s find out.
What is a debt counsellor?
A debt counsellor is a financial professional that provides debt counselling services and helps South Africans that are struggling to pay off their debt.
Debt counsellors help individuals to reduce their monthly debt repayments, making them more manageable and affordable. While providing financial support like record-keeping and offering legal protection through debt review.
🥳 Bonus: you can learn more about debt counselling (debt review) by checking out these posts:
The great news is that debt counsellors (and debt counselling) are regulated by the NCR, or National Credit Regulator. The same entity that regulates big brands like Absa, FNB, and Capitec.
We’ll go over the type of regulation that debt counsellors need to adhere to in a moment, but first, let’s talk about what debt counsellors do.
What do debt counsellors do?
Here’s what a debt counsellor does:
- Financial assessment (over-indebtedness)
- Developing a personalised debt repayment plan
- Negotiate with creditors to reduce interest rates and how much their clients owe each month
- Payment distribution to various creditors (making it easier to repay)
Now, some people think that debt counselling sounds too good to be true and then decide to proclaim that it is a scam (without doing their research).
Debt counselling is safe because it is well-regulated. Just make sure that you’re working with a registered debt counsellor.
Registered debt counsellors
Not just anyone can become a debt counsellor. Authorised debt counsellors in South Africa must be registered with the National Credit Regulator (NCR).
And to get registered, they must undergo training and meet specific criteria to qualify.
Additionally, registered debt counsellors are subject to compliance and reporting requirements. They have to play by the rules.
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As with everything, some people try to pass themselves off as debt counsellors without putting in the work. Unregistered ‘debt counsellors’ exist, and they’re the ones giving debt counselling a bad name.
That’s where the NCR comes in.
(And the DCASA)
NCR debt counsellors
The NCR, or National Credit Regulator, is a government organisation that regulates the credit industry in SA.
They help protect us from scammers and unfair credit providers.
The NCR is the entity that ensures that debt counsellors adhere to a set of standards, rules and regulations and provide top-notch service to consumers.
To check whether a debt counsellor is registered with the NCR — visit the NCR’s registered debt counsellors database.
Here’s an example of an NCR registration number for a debt counsellor. This is ours:
Credit providers, debt counsellors, and payment distribution agents all have NCR registration numbers.
In fact, big debt counselling companies will have several because each practising debt counsellor needs to be registered.
If the NCR doesn’t provide enough assurance, you’ll be glad to hear that there’s another force that is keeping debt counsellors in check — the DCASA.
The Debt Counsellors Association of South Africa (DCASA)
Think of it this way, the NCR regulates debt counsellors, and the DCASA represents them.
It is a professional association for debt counsellors that provides support, training, professional development, and, most importantly, advocates for consumer-friendly policies and regulations.
DCASA members must be registered with the NCR and comply with the association’s code of conduct and ethical standards.
How do debt counsellors make money in South Africa?
Debt counsellors make money by charging debt counselling fees. All costs are set and regulated by the NCR and include fees like application fees, admin fees, restructuring fees, and aftercare.
We put together a neat breakdown for you. Check it out here: Debt counselling (debt review) fees.
As we said, the National Credit Regulator (NCR) sets the maximum fees that debt counsellors can charge. So fees are roughly the same across service providers.
Debt counsellors can either work privately (known as bespoke debt counsellors) or work for a debt review company where they would earn a salary.
According to talent.com (at the time of writing), the average debt counsellor salary is roughly R 168 000 per year, with entry-level positions starting at R 138 000 per year, while more experienced debt counsellors earn up to R 210 006 annually.
Which, if you ask us, is fairly modest for a financial professional 😉
What did we learn?
- Debt counsellors are here to help;
- they’re regulated;
- how to check whether you’re working with an NCR registered debt counsellor;
- And even a bit about what debt counsellors earn.
If you’re interested in reducing your debt and making it affordable once again, check to see if you qualify to get started.